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What's the Impact of Employee Wellbeing on Business?

May 25, 2022
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8 mins

Investing in employee wellbeing brings huge benefits, from improved productivity to customer loyalty and employee retention.

Lawrence Barker
Investing in employee wellbeing brings huge benefits, from improved productivity to customer loyalty and employee retention.

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A few years ago, improving employee well-being meant ensuring people had comfortable office chairs. Companies would bring in ergonomic experts to fit employees’ chairs, tweaking and testing until everyone’s back was perfectly upright. 

While proper posture is critical for your long-term physical health, we should all be thankful that today's “employee well-being” means so much more. 

Companies are now aiming to create work environments where people can fully thrive. But is a happier workplace really affecting your company? Research tells us that improving employee satisfaction is not just good for employees—it’s also good for businesses. 

Why is employee well-being important in the workplace?

Plenty of studies have shown that improving employee well-being is a way to directly impact your business’ key success metrics. 

A study from the Harvard Business School found “a positive correlation between employee well-being and productivity” and pointed out a growing evidence base documenting this being a causal effect.  

According to another study, “employees in reasonable physical, mental, and emotional health are more likely to deliver optimal performance in the workplace than employees who are not.” 

For example, the figure below, taken from an LSE research paper, shows how employee well-being (measured as employee satisfaction) impacts four critical indicators of a company’s performance: customer loyalty, employee productivity, profitability, and staff turnover.

Source: LSE Business Review

Martin Luenendonk, the co-founder of Founder Jar, sums it up well: “If employees are not feeling safe, productive, and at their best, they can’t complete the tasks assigned to them. Since we are not machines, we need proper support, a good environment, and acknowledgment to work perfectly.”

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4 reasons to offer well-being initiatives in the workplace

Implementing well-being initiatives is a good idea if you’re looking to improve your business performance. Let’s look deeper into the four metrics from the graph above to understand why. 

1. Retention and staff turnover 

Absenteeism or staff turnover is expensive for companies. Data from Work Institute’s 2017 Retention Report estimated that it costs as much as 33% of a worker’s annual salary to replace someone. Happy and healthy employees who enjoy working at your company won’t typically go hunting for another job. By ensuring your employees’ morale remains high, you’ll avoid the considerable cost of finding new team members. 

Implementing policies that improve employees’ well-being will also improve employee retention and lead to less time and money spent on recruiting. 

2. Customer satisfaction and loyalty

The impact of employee satisfaction goes beyond employees themselves. It also affects your customers. 

Companies that focus on employee satisfaction get better results when asking customers about the likelihood of rebuying or referring the product to their friends. In a subscription economy, customer loyalty is vital for business growth. Since a 5% increase in customer retention correlates with at least a 25% increase in profit, it’s worth doing everything you can to improve your customer loyalty. Improving your employees’ well-being is one lever you can pull to help achieve this.

3. Profitability 

Higher profitability is another crucial reason why you should consider employee satisfaction. You can’t predict future earnings by only looking at employee well-being, of course, but research shows that higher employee satisfaction can mean better company results. For example, publicly traded companies with a happy workforce perform better on the stock market.

4. Employee Productivity & Engagement

Engaged employees are more productive in their jobs. Employee well-being plays a huge role in engagement. Recent experimental evidence collected by Harvard suggests that a meaningful increase in well-being yields, on average, an increase in productivity of about 10%. If you want more productive and engaged employees, employee well-being is a great place to start.

5 practical employee well-being offerings

We’ve seen again and again how taking employee well-being into account results in better business results. The research is compelling, but what does it look like to improve employee well-being in the real world?

Here are five great ways to put employee well-being into practice.

1. Offering health insurance or mental health services

Health is arguably a primary concern for a lot of people. Not surprisingly, 56% of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job. Use that to your advantage by offering the best health insurance you can afford. 

But don’t just think about physical health. Mental health is just as important to employees. 

With 84% of millennials saying they experienced burnout at their current job, prioritizing mental health is an effective way to improve well-being, care for your employees, and can contribute to reducing stress at work. There are many ways to do this—as shown by these great examples—but one way to start is by offering free coaching sessions or mental health days for those that need to recharge.

2. Sponsoring a gym membership

It turns out that sweating out your worries is literally a real thing. Working out regularly provides a long list of benefits. It improves your brain health, helps manage weight, reduces the risk of diseases, strengthens bones and muscles, and improves your ability to do everyday activities. 

Knowing this, plenty of businesses offer their employees the ability to exercise for less by providing a full or discounted gym membership. If your employees are remote, a simple alternative is to offer a monthly wellness stipend that reimburses membership at their local gym. You could also consider offering a subscription to a fitness app. 

3. Offering subscriptions to well-being apps

You can't be healthy when your mind is in a bad way. By offering well-being apps as part of your company’s well-being strategy, you can positively impact employees’ health. Apps allow you to support your employees while also using the technology’s advantages. 

Headspace, for example, is a mindfulness app that works to make meditation simple. Meditation has been shown to reduce stress and help focus more. Rise is an energy and sleep tracker app that can help you get better sleep and use personal energy peaks and dips to your advantage. 

Another exciting option focuses on offering mental well-being support for your entire workforce. Nilo Health, for example, connects employees with qualified mental health professionals using video sessions that aim to protect mental health by improving sleep and reducing anxiety and stress to prevent burnout

4. Tracking how people are feeling 

It can feel awkward to share your feelings at work. What if you’re the only one exposing yourself by saying you’re under the weather that day? 

But creating an environment where vulnerability is encouraged has a powerful ripple effect. By having team members share how they feel, you’re encouraging collaboration, support, and celebration. You’re also creating a trust-filled workplace. One way to do that quickly is to use Kona for daily check-ins with your team.

Kona also lets you measure the impact your well-being initiatives have on employees because you’ll be able to track their morale and well-being over time.

5. Allowing flexible or asynchronous work

If the pandemic showed us one thing, being productive while working remotely is possible. While some workers may prefer the atmosphere of an office, many have discovered that the flexibility of remote work has had a positive impact on their well-being. 

Eliminating long commutes leads to a better work-life balance and frees up your team members to spend more time on things they love. Remote or flexible working arrangements also enable employees to fit work around other priorities in their lives, such as children or volunteering. 

Perhaps most importantly, by offering employees the flexibility to work remotely or asynchronously (which means they don’t have to be online at a certain time), you’re also showing that you trust them. Employees who feel trusted feel less stress and are more engaged and productive

What’s the bottom line on employee well-being?

There’s a growing amount of evidence that points to a crystal clear conclusion: spending resources on employee well-being positively impacts both your employees and your business. 

“The bottom line is if employers do not invest in the well-being of employees proactively, they will pay the price in a reactionary sense,” says Ladeana Bell, a licensed mental health professional and psychotherapist at Arkansas Foundation for Medical Care. “Whether it’s financial loss through high turnover or higher healthcare claims due to stress-related illnesses, or through employees who have no sense of devotion to their jobs.”

Investing in your employees’ well-being pays dividends in their performance, retention, engagement, and morale. It positively impacts your customers and their loyalty to your brand. 

There’s no downside to investing in your people’s well-being.

Meet the Author

Lawrence Barker

Lawrence uses his decade of customer experience leadership to create content for B2B SaaS companies that love their customers. He writes on a broad range of topics, all with the aim of helping human-centered companies attract the right customers and empower them to be successful.

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